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I remember overhearing one of the partners talking about year end bonuses and what not and the part that stuck out to me the most, which I had previously thought about, was that they wanted to completely "empty out" the accounts. That is, unlike a corporate, they're not concerned with having a certain percentage or dollar amount that returns to SHs or some residual account. Made me realize how they're able to make so much more (and give such good bonuses) even though our rates are significantly lower than big firms.

On a different subject, I have what may be a rather silly question about loan repayment options, but I figure you guys can help me figure out whether this approach makes any sense: Is it possible to extend the life of your loan to the 25-year payment cycle, but continue to pay the same total amount you would on the 10-year schedule while allocating all of the amount in excess of the new minimum payments towards the higher interest rate loans?

For instance, I haven't consolidated my loans and have some ~15 loan groups, approximately 40% of which are Staffords at 6.55% interest and the other 60% are Grad Plus at 7.65% interest. My minimum monthly payment is around $2k on a 10-year schedule, and I've been paying an extra couple hundred dollars per month on top of that minimum solely to one of the higher interest-rate groups. Is there anything that would restrict my ability to switch to a 25 year-cycle (other than the 1-switch-per-year rule) so that my minimum payment is ~$1200, which would allow me to continue paying the ~$2250 with the remaining amount being allocated to the higher interest rate loans (i.e., only to Grad Plus groups)? In essence, it would simply be a way to focus the bulk of my payments on the more painful debt while lowering the amount I'm contributing to the less expensive debt.

There's probably some really obvious answer that I'm missing that explains why I couldn't elect to do this (or perhaps everyone is already doing this and I'm way behind the times for not thinking of this earlier), but I couldn't think of anything off the top of my head. Anyone have any thoughts on this?

FYI, I've opted to post this anonymously because I've ran this thought by a couple co-workers. Thanks in advance for any thoughts.

Anonymous User wrote:On a different subject, I have what may be a rather silly question about loan repayment options, but I figure you guys can help me figure out whether this approach makes any sense: Is it possible to extend the life of your loan to the 25-year payment cycle, but continue to pay the same total amount you would on the 10-year schedule while allocating all of the amount in excess of the new minimum payments towards the higher interest rate loans?

For instance, I haven't consolidated my loans and have some ~15 loan groups, approximately 40% of which are Staffords at 6.55% interest and the other 60% are Grad Plus at 7.65% interest. My minimum monthly payment is around $2k on a 10-year schedule, and I've been paying an extra couple hundred dollars per month on top of that minimum solely to one of the higher interest-rate groups. Is there anything that would restrict my ability to switch to a 25 year-cycle (other than the 1-switch-per-year rule) so that my minimum payment is ~$1200, which would allow me to continue paying the ~$2250 with the remaining amount being allocated to the higher interest rate loans (i.e., only to Grad Plus groups)? In essence, it would simply be a way to focus the bulk of my payments on the more painful debt while lowering the amount I'm contributing to the less expensive debt.

There's probably some really obvious answer that I'm missing that explains why I couldn't elect to do this (or perhaps everyone is already doing this and I'm way behind the times for not thinking of this earlier), but I couldn't think of anything off the top of my head. Anyone have any thoughts on this?

FYI, I've opted to post this anonymously because I've ran this thought by a couple co-workers. Thanks in advance for any thoughts.

You have to discuss this with your lender(s). Back when I was paying off my loans, they wouldn't let me do any allocation.

Anonymous User wrote:On a different subject, I have what may be a rather silly question about loan repayment options, but I figure you guys can help me figure out whether this approach makes any sense: Is it possible to extend the life of your loan to the 25-year payment cycle, but continue to pay the same total amount you would on the 10-year schedule while allocating all of the amount in excess of the new minimum payments towards the higher interest rate loans?

For instance, I haven't consolidated my loans and have some ~15 loan groups, approximately 40% of which are Staffords at 6.55% interest and the other 60% are Grad Plus at 7.65% interest. My minimum monthly payment is around $2k on a 10-year schedule, and I've been paying an extra couple hundred dollars per month on top of that minimum solely to one of the higher interest-rate groups. Is there anything that would restrict my ability to switch to a 25 year-cycle (other than the 1-switch-per-year rule) so that my minimum payment is ~$1200, which would allow me to continue paying the ~$2250 with the remaining amount being allocated to the higher interest rate loans (i.e., only to Grad Plus groups)? In essence, it would simply be a way to focus the bulk of my payments on the more painful debt while lowering the amount I'm contributing to the less expensive debt.

There's probably some really obvious answer that I'm missing that explains why I couldn't elect to do this (or perhaps everyone is already doing this and I'm way behind the times for not thinking of this earlier), but I couldn't think of anything off the top of my head. Anyone have any thoughts on this?

FYI, I've opted to post this anonymously because I've ran this thought by a couple co-workers. Thanks in advance for any thoughts.

You have to discuss this with your lender(s). Back when I was paying off my loans, they wouldn't let me do any allocation.

Thanks for the thoughts.

For what it's worth, I'm already doing an allocation, which is what gave me the idea. I'm currently paying minimum payments on a 10-year for around $2000, and then I'm paying another $250 or so per month to a single Grad Plus group. Or do you mean that a restriction that prohibits this idea could be in place if I'm not on a 10-year schedule (i.e., once you drop off a 10-year schedule, you can't allocate to an individual group)?

Who is your lender? You can almost certainly do that, but some lenders make it more painful than others. You need to take two steps: one, pay the extra money toward your PLUS loans, but two, specify that the extra must go to principle, not prepayment. Some lenders will make you do this by sending in a paper form, but it can be done.

mr. wednesday wrote:Who is your lender? You can almost certainly do that, but some lenders make it more painful than others. You need to take two steps: one, pay the extra money toward your PLUS loans, but two, specify that the extra must go to principle, not prepayment. Some lenders will make you do this by sending in a paper form, but it can be done.

I had Sallie Mae, but my loans were transferred to them just before I paid off fully.

One nifty trick they let me do is any payment of above the required minimum payment can be charged to a credit or debit card. I almost tripped when I heard the rep ask if I wanted to pay the additional through a debit or credit card. No fees, no nothing.

Fresh Prince wrote:I had Sallie Mae, but my loans were transferred to them just before I paid off fully.

One nifty trick they let me do is any payment of above the required minimum payment can be charged to a credit or debit card. I almost tripped when I heard the rep ask if I wanted to pay the additional through a debit or credit card. No fees, no nothing.

Fresh Prince wrote:I had Sallie Mae, but my loans were transferred to them just before I paid off fully.

One nifty trick they let me do is any payment of above the required minimum payment can be charged to a credit or debit card. I almost tripped when I heard the rep ask if I wanted to pay the additional through a debit or credit card. No fees, no nothing.

Good lord that's amazing. You could get into some real shenanigans - pay off all loans on CC 1, do a 0% balance transfer to CC 2 (even if you get hit with a one time fee) and then aggresively pay down CC 2 over the course of a year while on an intro 0% APR.

thesealocust wrote:Good lord that's amazing. You could get into some real shenanigans - pay off all loans on CC 1, do a 0% balance transfer to CC 2 (even if you get hit with a one time fee) and then aggresively pay down CC 2 over the course of a year while on an intro 0% APR.

Technically, the Chase Slate offers 0% interest on balance transfers and no fees if the transfer is done within a year (either that or 16 months). If you have good credit, you can score a good credit line too. I got $30,000 when I applied.

I knew I was going to pay off the balance upon charging the card, so the 0% interest option was worth way less to me than tons and tons of frequent flyer miles..

Even if your lender doesn't accept credit card, my friend reported success using the balance transfer cheques. He threw about $30k of his loans into the 0% interest card and pays that off as well as the student loans at the same time. $30k of loans being paid off at 0% interest, and the rest of your loans not accruing interest based on the $30k principal that was paid off.

Every cent counts. If you're really eager to get rid of your debt, you've gotta gorilla warfare this shit.

If you have good credit and a sizable amount of cash for a downpayment, buy a house. When applying for a mortgage, ask for the bank to increase the size of the mortgage to pay off the student loan. If there's the right combination of real estate value in the property, equity from the down payment, and size of loan payoff, a bank will definitely consider this (I encountered success with Wells Fargo in the past).

Pros:1) Lock in interest at around 3.5% interest.2) Take advantage of those nice tax deductions related to home ownership and mortgage payment.3) Combine your "rent" payments and "student loan payments" in one.

This is definitely advantageous if you can score property with a ton of investment upside.

The only con I could think of at the time was that if the government offered some sort of comprehensive student loan forgiveness program, you wouldn't be able to take advantage of it because your loans would no longer be "student loans."

thesealocust wrote:If I had access to large sums of money at 3.5% I'd be running a fucking hedge fund by now

Good tip; the housing market exploded but there is still a lot of personal finance gold to be panned for in them hills.

Yeah, if you live in a market with a lot of blue chip real estate investment upside, you're looking at a solid win. Markets like Houston are not as good for this strategy.

If one is seriously considering this strategy, best to do it ASAP. I think everyone is expecting Bernanke to lay down the taper hammer relatively soon (Q1 2014?), and that'll lose you your 3.5% interest. The interest rate was already rising a month or two ago (I think I saw averages jump to 4.11% or so).

Big Shrimpin wrote:Anyone else at the office on this GLORIOUS October Saturday afternoon?

At the home office, unfortunately. But that's better than the real office.

I maintain sanity and motivation by reminding myself of the little things I have to look forward to at the end of the day. Fortunately, today it is a football game. Many days, it is simply in IPA and bed.

I never heard of this...it looks pretty interesting. According to their 10-K, they had a 2.57% default rate and another 1.5% that was late but not yet in default. That seems decent but it worries me a little they have been lending for less than 2 years. Many loans remain current for the first year so I wonder if the default rates will climb.

I also wish they broke their default info down by their internal ratings of risk...